The impact of mergers and acquisitions in the banking industry (a case study of fidelity bank and procredit savings and loans)
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Date
2021
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KNUST
Abstract
Mergers and Acquisitions are considered as one of the routes by which companies expand their business and enter into new markets. Essentially these forms of expansion are external in nature in that they all have an element of foreign presence attached to them. These methods of expansion of business have the advantages of reducing risks as there is a new local knowledge or expertise which is added onto the company. There is potential for the acquired organisation to bring on board new knowledge and synergies to the total group which may be valuable in operating in the new market conditions. However, along with the advantages to the organisation there are also associated disadvantages which includes falling into debt due to the leveraged nature of the acquisition and higher risk of failure in the new consolidated firm. The problematic area in mergers and acquisitions has to do with the fact that most existing literature on the topic are relatively old therefore they used database that existed in the late 2000s. Most international companies focus on the worldwide effects of mergers and acquisition. The history of mergers and acquisition have revealed that almost two thirds of mergers and acquisitions taking place experience failure and feel disappointed based on their high expectations. In addition to the above background on Mergers and acquisitions, this study sought to bring to the fore, the effect of mergers and acquisitions on banks financial performance in the Ghanaian banking industry via a case study of Fidelity Bank Ghana Limited and Procredit Savings and Loans. The study identified the effects of mergers and acquisitions on the financial performance of Fidelity Bank Ghana Limited post-acquisition of Procredit Savings and Loans. Furthermore, it identified areas in which Fidelity Bank Ghana Limited underperformed and needed improvement. The study adopted the financial statements of Fidelity Bank Ghana in the collection of data for the study from which analysis were made. The study concluded with a finding that even though the acquisition of procredit brought about a downward trend in the performance of Fidelity Bank in two years after acquisition, it picked up again after the 3rd year. Conclusion and recommendations on how the positive effects of mergers and acquisitions on the financial performance of banks could be maximized
Description
A thesis submitted to the department of accounting and finance, Kwame Nkrumah university of science and technology, college of humanities and social sciences. In partial fulfilment of the requirement of the award of a degree of master of business administration (finance option)